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JS Kongō with JS Ashigara while under construction at Mitsubishi in Nagasaki.

In 2000, the Japan Defense Agency Maritime Staff Office included another two Aegis ships in its five-year budget on top of the four Kongō-class destroyers originally ordered.

The Atago class is fundamentally an improved and scaled-up version of the Kongō-class destroyers. The class features large accommodation and the ships are capable of flexible operation. One of the most obvious changes is an additional hangar to carry one SH-60K helicopter. In comparison to the Kongō class/Arleigh Burke class (Flight I) which only had helicopter platforms (but no support equipment), these ships have better helicopter handling facilities. To enhance the Atago class' function as command centers, the bridge is two decks higher than aboard a Arleigh Burke class Flight IIA, making their full load displacement over 10,000 tons—the first time for a JMSDF surface combat vessel. The gun caliber has extended from the 54 caliber of the Kongō class to the 62 caliber with strengthened powder charge enabling a 38 km firing range. As with other Japanese ships being refit, the American-made Harpoon missiles (such as in the initial configuration of the Kongō class) have been replaced with the Japanese-made Type 90 (SSM-1B) surface-to-surface guided missiles.

Japan has also purchased a manufacturing license for these weapons for use on their Kongō-class Aegis destroyers. Japan Steel Works will manufacture, assemble, and test the weapons.

The fire-control system for the Atago class is the Aegis Weapon System Baseline 7 phase 1, which will combine American- and Japanese-manufactured systems to make up the complete Aegis system. The Aegis Weapon System baseline 7 has improved tracking accuracy for vertical targets, and an acquisition capability for small low-altitude targets compared with the Aegis Weapon System baseline 4 and 5, used in Kongō class. The Atagos also use a new stealthier plain-structure mast, which was originally designed in Japan, rather than familiar lattice type mast. A new modified smokestack and other improvements were also introduced to make the Atagos stealthier.

Like the Kongō class, the Atago-class destroyers are equipped with a comprehensive suite of weapon systems including:

One Mk 45 Mod 4 127 mm 62-caliber gun, in a stealth-shaped mount. Made by Japan Steel Works under an American license from its original manufacturer.

In keeping with Japan's post-war pacifist constitution, the Atago class does not currently carry the Tomahawk missile (although, in theory at least, use of an anti-ship version is permissible). While the two ships of Atago class are entering service, the Tachikaze-class destroyers, Tachikaze and Asakaze are to be decommissioned.

In comparison to the Chinese Type 052D destroyer, their updated radar enables them to engage ballistic missiles while the Type 052D's capability for ballistic missile defense is unknown. The Atagos have 96 vertical launch silos (VLS) compared to 64 in the Chinese vessel, can defend against a broad spectrum of threats to a task force in addition to themselves, have greater useful detection range through CEC, and are built to accommodate future upgrades. The Type 052D has superior offensive capabilities using cruise missiles and being able to hold more anti-ship missiles contained in their VLS; the two designs are matched in terms of main and defensive gun armament and digital networking and information sharing.[3]

In 2015, Japan formally began the construction of two new Atago ships of the improved 27DD subclass. The hull is enlarged for an empty displacement of 8,200 tons to allow for growth space for advanced weapon systems. The CODLAG propulsion system received several improvements to the ships' space, power management and distribution. New weapons are to be incorporated such as anti-ship missiles, and in-development indigenous point-defense lasers and electromagnetic railgun systems. Other improvements include the AN/SPQ-9B surface search radar, a multi-static sonar system, and an enhanced Aegis combat system with better Cooperative Engagement Capability (CEC). The two 27DD vessels are expected to be commissioned in 2020 and 2021.[4]